Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q1 2023 Earnings Presentation
23 slides from Cf Industries's earnings presentation, May 2, 2023
Slide 1: 2023 First Quarter Financial Results
2023 First Quarter Financial Results May 1, 2023 NYSE: CF
Slide 2: Safe harbor statement
Safe harbor statement All statements in this presentation by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other than those relating to historical facts, are forward-looking statements. Forward-looking statements can generally be identified by their use of terms such
Slide 3: Note regarding non-GAAP financial measures
Note regarding non-GAAP financial measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that EBITDA, adjusted EBITDA, free cash flow, free cash flow to adjusted EBITDA conversion and free cash flow yield, which
Slide 4: Strong first quarter operational performance, energy spreads underpin solid results
Strong first quarter operational performance, energy spreads underpin solid results Solid results driven by strong product prices Net earnings Net earnings per in the quarter, partially offset by realized diluted share natural gas hedge loss $560 M $883 M $2.85 $4.21 Repurchased more than 1 mill
Slide 5: Financial results – first quarter 2023
Financial results – first quarter 2023 In millions, except percentages, per MMBtu and EPS Q1 2023 Q1 2022 Net sales $ 2,012 $ 2,868 Gross margin 863 1,698 - As a percentage of net sales 42.9 % 59.2 % Net earnings attributable to common stockholders $ 560 $ 883 Net earnings per diluted share 2.85 4.2
Slide 6: Capacity growth and share repurchases drive nitrogen participation per share
Capacity growth coupled with share repurchases continue to drive nitrogen participation per share… CF Industries’ Nitrogen Volumes and Shares Outstanding as of March 31, 2023 2009 – Q1 2023 Nitrogen per share CAGR: 10.6% Annual Nitrogen Equivalent Tons per 1,000 Shares Outstanding Million Shares Out
Slide 7: Resulting in strong free cash flow participation
…resulting in strong free cash flow participation CF Industries’ Free Cash Flow and Shares Outstanding as of period-end LTM Free Cash Flow (millions) Shares Outstanding (millions)(3) Canada/US tax matter (2) $4,000 350 $3,000 300 250 $2,000 200 $1,000 150 $0 100 -$1,000 50 -$2,000 0 2011 2012 2013 2
Slide 8: Strong free cash flow metrics show undervalued equity
Strong free cash flow metrics show undervalued equity Canada/US Free Cash Flow Yield(1) tax matter (3) 19.6%(3) 19.9%(3) 2018-Q1 2023 LTM average yield 16.7% 16.5% 14.7% 9.7% 8.9% 9.0% 2018 2019 2020 2021 2022 Q1 2023 LTM FCF/Adj EBITDA 67% 57% 55% 79% 47% 46% conversion(2) % (3) 56% 55%(3) Attracti
Slide 9: Low stocks-to-use ratios drive higher grain values
Low stocks-to-use ratios drive higher grain values; strong production required to replenish stocks Global Coarse Grains Stocks-to-Use Ratio Global Oilseeds Stocks-to-Use Ratio vs vs Corn Futures Prices(1) Soybean Futures Prices Percent USD per Bushel Percent USD per Bushel 16.0% $7 30% $16 14.0% $6
Slide 10: Corn, soybean & wheat returns remain above seven-year average
Corn, soybean & wheat returns remain above seven-year average Estimated Returns over Variable and Land Cost, by Crop $ per acre $450 Corn Soybeans Wheat ► Crop returns improved recently as futures remained high and input prices $400 declined in Q1, supporting planted acreage and fertilizer applicati
Slide 11: Energy forward spreads support North American margin advantage in 2023
Energy forward spreads support North American margin advantage in 2023 compared to Europe and Asian producers Global Energy Price 2020-2023F North American Production Margin Advantage(1) USD/MMBtu USD/tonne 100 1,600 Ammonia(2) Urea JKM natural gas 50 1,400 TTF natural gas 45 Chinese anthracite coal
Slide 12: Chinese urea export constraints continue to limit volumes available for trade
Chinese urea export constraints continue to limit volumes available for trade Chinese Urea Exports Million metric tons (MMT) 7 6 5 Sep-Dec 4 Estimated ~3 MMT 3 2 Jan-Aug Mar-Dec 1 Jan-Feb 0 2017 2018 2019 2020 2021 2022 2023F Sources: Industry Publications, CF Analysis, 2023E CF estimate 12
Slide 13: Lower volumes in India in 2023, resilient import demand in Brazil
Lower volumes in India in 2023, resilient import demand in Brazil and developing countries India Imports Brazil Imports Million metric tons Million metric tons 12 12 10 10 8 8 6 6 4 4 2 2 0 0 2013 2015 2017 2019 2021 2023F 2013 2015 2017 2019 2021 2023F Rest of Asia(1) Imports Rest of Latin America(
Slide 14: Capital management strategy with a long-term view
Capital management strategy with a long-term view Focused on increasing free cash flow generation capacity and growing shareholder participation in our free cash flow Blue & green Evaluating DEF ammonia projects production expansion Disciplined growth Invest in high return initiatives & clean projec
Slide 15: Expanding our network through strategic initiatives
Expanding our network through strategic initiatives CF Industries to purchase ammonia production complex located in Waggaman, LA from Incitec Pivot for $1.675 billion, subject to adjustment - $425 million of purchase price allocated to a long- term offtake agreement$16.38 $4.24 with IPL’s Dyno Nob
Slide 16: Nitrogen Market 2023 Outlook
Nitrogen Market 2023 Outlook Pricing Supply/Demand Energy Differentials Weakened in 1Q 2023 as higher North America – Farmer profitability Energy differentials between North global operating rates increased continues to be strong. USDA America and marginal producers in supply availability and
Slide 17: Significant progress to support our commitment to a Clean Energy Economy
Significant progress to support our commitment to a Clean Energy Economy 2023 2024 2025 2027 Initiated Purchased 2.2 billion Decarbonization cubic feet of natural gas certified by MiQ Engineering Expected activities project progress completion Donaldsonville green ammonia Engineering 2025 project ac
Slide 18: Outstanding safety performance drives industry leading production capacity utilization
Outstanding safety performance drives industry leading production capacity utilization Total Recordable Incident Rate North American Ammonia Percent of Capacity Utilization (1) 5-Year Rolling Avg. Percent of Capacity Total injuries per 200,000 work hours 100% CF North 4.5 America (2) 98% 97% 96% 96%
Slide 19: Appendix
Appendix
Slide 20: CF Industries Adjusted EBITDA sensitivity table
CF Industries Adjusted EBITDA sensitivity table Table illustrates the CF Industries business model across a broad range of industry conditions EBITDA Sensitivity to Natural Gas and Urea Prices(1) $ billions CF Realized Natural Gas Cost ($/MMBtu) 2.00 2.50 3.00 3.50 4.00 4.50 5.00 $300 $2.2 $2.0 $1.9
Slide 21: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA
Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA In millions Q1 2023 Q1 2022 Q1 2023 FY 2022 FY 2021 LTM Net earnings $ 650 $ 1,051 $ 3,536 $ 3,937 $ 1,260 Less: Net earnings attributable to noncontrolling interest (90) (168) (513) (591) (343) Net earnings attributable to commo
Slide 22: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA, continued
Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA, continued In millions FY 2020 FY 2019 FY 2018 Net earnings $ 432 $ 646 $ 428 Less: Net earnings attributable to noncontrolling interests (115) (153) (138) Net earnings attributable to common stockholders 317 493 290 Interest exp
Slide 23: Non-GAAP: reconciliation of cash from operations to free cash flow and yield
Non-GAAP: reconciliation of cash from operations to free cash flow and free cash flow yield In millions, except percentages, share price, and ratios FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 LTM Cash provided by operating activities $ 1,497 $ 1,505 $ 1,231 $ 2,873 $ 3,855 (4) $ 3, 411(4) Capit
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